NBC Universal/Apple dispute grows fierce

NBC Universal has denied a previous statement from Apple as to the reasons behind the dispute between the firms - and goes on to imply that iPod users are media thieves.

By
Jonny Evans
| 03 Sep 07

NBC Universal and Apple are in complete disagreement as to the reasons behind the decision to remove all NBC Universal programming from the iTunes Store.

As revealed last week, all NBC Universal content will disappear from iTunes. Apple’s agreement with NBC ends in December. Since NBC would withdraw its shows in the middle of the television season, Apple has decided to not offer NBC TV shows for the upcoming television season beginning in September.

Apple claims the decision was driven by NBC's attempt to double the wholesale price it charges for each NBC TV episode sold on iTunes.

An Apple press statement explains this, "would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99."

The company notes that ABC, CBS, FOX and The CW, along with more than 50 cable networks, are signed up to sell TV shows from their upcoming season on iTunes at $1.99 per episode.

“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said Eddy Cue, Apple’s vice president of iTunes. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”

NBC supplied iTunes with three of its ten best selling TV shows last season, accounting for 30 per cent of iTunes TV show sales, Apple admits.

NBC has issued its own public statement in denial of Apple's claims: "We never asked to double the wholesale price for our TV shows. In fact, our negotiations were centered on our request for flexibility in wholesale pricing, including the ability to package shows together in ways that could make our content even more attractive for consumers,” said Cory Shields, executive vice president of communications for NBC Universal, in a statement.

Shields also said NBC Universal is: "Disappointed in not being able to successfully negotiate a new iTunes agreement with Apple. We're hopeful that we can reach a resolution before the existing contract expires."

The company slammed Apple, saying that the company's retail pricing strategy for iTunes is designed to drive iPod sales, "at the expense of those who create the content that make these devices worth buying."

It's a strange affair, as NBC Universal is effectively driving fans of its TV shows to use file-sharing websites and digital recording devices in order to enjoy content on their iPods.

The NBC statement also accuses iPod users and iTunes purchasers of piracy, saying the company also asked Apple to "take concrete steps" to prevent piracy, alleging that "the typical iPod contains a significant amount of illegally downloaded material."

That statement is likely to raise the anger of legitimate consumers who actively choose to seek out TV content through iTunes, parting with cash, rather than sourcing content illegally.

NBC Universal is drawing accusations that it is showing the same blinkered attitude the major labels did in 1999, when they first began to suffer the effects of file-sharing.

Critics point out that digital services launched by record labels then were dead ducks, failing to gain market traction and pointing out that it wasn't until iTunes appeared that legitimate online media download services achieved public popularity.

It's no coincidence, probably, that NBC Universal is behind a service that's due to launch soon in the US called Hulu.com. It isn't known how successful this service will be.

It's also unclear if NBC Universal is simply siding with Universal Music, which has refused to agree a long-term music distribution agreement with iTunes.

Some industry observers note that by using its market dominance in terms of music, film and television in this way, Universal could be accused of trying to control development of the digital media market, a move which could be construed as anti-competitive by regulators, though no such complaint has been submitted at the present time.